Do you have a source for that $5-6 return on investment figure? I'm not doubting you, just would like to read more about it since that's a compelling argument against budget cuts.

The Treasury Department's own analysis from 2021 estimated that every additional dollar invested in tax enforcement yields at least $5 in revenue. More recent studies suggest the return could be even higher for certain enforcement activities targeting high-income individuals and large corporations. For comparison, the Congressional Budget Office (CBO) has historically used more conservative estimates of a 3:1 to 5:1 return ratio, but even at the low end, that's still a 300% return on investment. There's a good article in the Journal of Tax Policy from last quarter that breaks down different enforcement activities and their respective ROIs. The highest returns come from audits of high-income individuals with business income and large corporations with international operations.

It's political theater. Politicians know attacking the IRS plays well with their base, regardless of the practical impacts. There's decades of anti-government rhetoric that's made "IRS" a four-letter word to many voters. Plus, powerful donors benefit from a weakened tax enforcement system.

I hadn't even thought about state-specific credits! Do you know where I should look to find out if my state has different age requirements for their version of the EITC?

Check your state's department of revenue or taxation website - they usually have a dedicated page for state tax credits. Just google "[your state] earned income tax credit" and it should come up. You can also look at your state tax form instructions which typically list all available credits. About half of US states offer their own EITC, and the rules do vary. Some states make it a percentage of the federal credit, but others have their own qualifications. Worth checking because even if you don't qualify for the federal one, you might get some benefit from your state!

That's only partially right. You also qualify for EITC under 25 if you're a specified student who was in foster care or experienced homelessness. Just adding that detail in case it applies to OP or anyone else reading.

Thanks for this! Quick question - what about things bought while on vacation in another state and brought back? Like if I buy clothes in Oregon (no sales tax) and bring them home to California?

That's exactly what use tax is designed for! If you buy clothes in Oregon (no sales tax) and bring them back to California, technically you owe California use tax on those items. This is one of the most common situations where use tax applies, but also one of the hardest for states to enforce. Generally speaking, if you bought something significant (like expensive electronics, jewelry, furniture, etc.) while out of state and didn't pay sales tax, you should report it on your state return and pay the use tax.

That's what I do! I just use the lookup table amount on my state return. Not worth the headache of tracking every little purchase. Though I did separately report a laptop I bought online tax-free since it was over $1000.

The gift was definitely under $5k, so nowhere near that threshold! I hadn't even thought about tax treaties between countries. Is there an easy way to check that?

You can find tax treaties on the IRS website under "Tax Treaties" - they have a page listing all countries with tax treaties with the US. For Ecuador specifically, there are some provisions but they mostly relate to income earned from working, not scholarships or grants. Given the small gift amount and the fact that all scholarship money went to qualified expenses, your cousin is almost certainly in the clear with no filing requirements.

This is correct! Form 8843 isn't technically a tax return but a statement that nonresident aliens (including students) should file to document their presence in the US. It's pretty simple to fill out and doesn't require any calculations.

Thanks for this explanation. I didn't realize that capital losses don't offset self-employment tax. That might explain a lot. I definitely worked from home for all my 1099 income - would that qualify for home office deduction? I used my living room as my workspace since I didn't have a separate office.

For the home office deduction, you need a space used "regularly and exclusively" for business. If your living room was also used for personal activities, it typically wouldn't qualify. However, if you had a specific section of the living room that was used only for work (like a desk area never used for anything else), that portion might qualify. Other deductions you should check for include any supplies, software, internet costs (partial), phone expenses, and any industry-specific materials you purchased. Also, if you drove anywhere for your 1099 work, those miles are deductible. Even small deductions add up and reduce both your income tax and self-employment tax burden.

Not OP but I didn't know about the carryover thing! So if I had $7k in capital losses this year, I can use $3k now and then $3k next year and $1k the year after? Does it just automatically carry over or do I need to do something special to claim it in future years?